Louisiana Public Service Commission v. Texas & New Orleans Railroad

Background

The Interstate Commerce Commission ordered higher railroad rates for sand, gravel and similar road-construction materials in Arkansas, Oklahoma, Texas and western Louisiana, adding an eight-cent-per-ton charge when shipments crossed the Mississippi River. The orders applied to both interstate and intrastate moves. State commissions mostly adopted the scale, but Louisiana’s commission refused it for territory south of the Vicksburg, Shreveport & Pacific Railroad and for traffic wholly within that area. Railroad companies sued to force application of the federal rates and Louisiana sued to annul them; a three-judge federal court upheld the federal orders.

Reasoning

The Court considered whether the federal agency could add the ferry charge, whether that charge improperly favored ports in other States, and whether the agency had adequate evidence to act. The Justices held the Constitution’s ban on giving preference to ports between States did not forbid the ferry allowance. The Court also explained the agency need not calculate every separate cost element in advance. The record showed Louisiana’s lowest intrastate scale largely covered government road projects and was far lower than the federal scale, which disadvantaged interstate shippers; that disparity justified the Commission’s finding of undue discrimination and its replacement of the lower rates.

Real world impact

The ruling lets the federal agency adjust intrastate railroad charges to prevent local rate structures from undercutting interstate commerce. Carriers may apply the eight-cent ferry allowance for Mississippi crossings, and out-of-state suppliers are less likely to be shut out of Louisiana road contracts. The decrees below were affirmed.